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right to regulate and improve navigable rivers and the ports on such rivers, and the power to close one of several channels in a navigable stream, if in the judgment of congress the navigation of the river will be thereby improved. Thus the power of congress over the Savannah river was not affected by the compact between South Carolina and Georgia in 1787, before the adoption of the constitution.' (As to concurrent power of state in river improvements, see chap. 2, infra.)
To constitute interstate commerce, it must be so in fact and not only in intention. The intention to ship manufactured goods to other states does not make a contract for the operation of a factory for their manufacture relate to interstate commerce in a constitutional sense so as to exempt it from the operation of state laws, nor does such intention to export property from the state constitute a ground for the exemption from the power of state taxation. (See § 20, infra.)
§ 8 (7). What is not commerce.-While commerce is more than traffic and includes commercial intercourse and the transmission of intelligence, it does not include the contractual relations between citizens of different states, which are incidental or even in one sense are essential to interstate commercial intercourse. The distinction may be illustrated by a bill of lading and a bill of exchange. A bill of lading upon an interstate or foreign shipment represents the property shipped, and in the case of an interstate shipment is beyond the taxing power of a state, and in the case of a foreign shipment a tax upon a bill of lading is a tax upon exports, and therefore beyond the taxing power of either the state or federal government. On the other hand, a bill of exchange, whether drawn on an interstate shipment or a foreign shipment, is an incident of such commerce and not a part of it. It follows, therefore, that a broker dealing in foreign bills of exchange is not engaged in commerce, but in supplying the instrumentalities of commerce,
1 South Carolina v. Georgia, 93 U. S. 4, 23 L. Ed. 782 (1876). As to the admiralty jurisdiction, see infra, § 13.
2 Diamond Glue Co. v. United States Glue Co., E. D. of Wis. (1900), 103 Fed. Rep. 838.
8 Almy v. California, 24 How. 169, 16 L. Ed. 644 (1860); Woodruff v. Parham, 8 Wall. 123 (1870), 19 L. Ed. 382.
4 Fairbanks v. United States, 181 U. S. 283 (1901), 45 L. Ed. 862.
and a state tax upon money and exchange brokers is not void as a regulation of commerce.1
The business of a manufacturing company, although the manufactured product is sold by the company in other states and in foreign countries, is not interstate commerce. Commerce succeeds manufacture and is not a part of it, and the relation of the manufacturer, in such a case, to interstate and foreign commerce is incidental and indirect, and the business therefore is subject only to state control.
Trademarks, though useful and valuable aids of commerce, are not subject to congressional regulation, unless limited to their use in commerce with foreign nations and among the several states and with Indian tribes."
§ 9 (8). Insurance and commerce.-An important application of this principle, that the contractual relations incidental to commerce are not included in the commerce clause, has been made in relation to the business of insurance. The business of fire and marine insurance is intimately related to interstate and foreign commerce, and is indeed an essential feature of such commerce, while life insurance involves an associated relation for the averaging of human lives, extending not only through the states of this country but foreign countries. It
1 Nathan v. Louisana, 8 How. 73 (1850), 12 L. Ed. 992. The lending of money by a citzen of one state to a citizen of another is not interstate commerce. Nelms v. Mortgage Co., 92 Ala. 157. Mr. Hamilton, in his argument on the power to charter a national bank, 3 Hamilton's Works (Lodge), pp. 179-203, enumerates, among the subjects over which he had little doubt the national power extended, the regulation of policies of insurance and bills of exchange drawn by a merchant of one state upon a merchant of another.
2 Kidd v. Pierson, 128 U. S. 1 (1888), 32 L. Ed. 346; United States v. Knight Co., 156 U. S. 1 (1895), 39 L. Ed. 325.
• Trade Mark Cases, 100 U. S. 82, 25 L. Ed. 550 (1879).
• President Roosevelt in his message of December, 1904, says that the business of insurance vitally affects the great mass of the people of the United States, and is national and not local in its ap plication, and that it involves a multitude of transactions among the people of the different states and between American countries and foreign governments. He urges congress to consider whether the power of the Bureau of Corporations, infra, § 59, could not constitutionally be extended to cover interstate transactions in in⚫surance.
was held first in the case of a foreign fire insurance company which claimed exemption from state control, that a policy of insurance was not an instrument of commerce, but was a mere contract for indemnity against loss by fire, and that the fact that the parties were domiciled in different states did not make such contracts interstate transactions within the meaning of the commerce clause. Later this ruling was applied to a contract of marine insurance, and the court said, if the power to regulate interstate commerce applied to all the incidents to which commerce might give rise, and to all the contracts which might be made in the course of its transaction, the power would embrace the entire sphere of mercantile activity in any way connected with trade between the states. Finally, in 1900, the ruling was extended to the case of mutual life insurance, although here it was contended that the policies were not mere contracts of indemnity, but represented an associated relation based on the comparative certainty of the average life and the uncertainty of the individual life, thus necessitating a uniform law controlling this associated relation of parties resident in different states and countries. The court, however, refused to distinguish the business of mutual life insurance from that of fire and marine insurance. The business of insurance therefore in all its branches is subject to the legislation of the different states wherein the companies are located.
It was strongly contended by the dissenting judges in the lottery cases, supra, that lottery tickets, under the ruling in the insurance cases, were mere evidences of contractual relations, furnishing the means of enforcing contract rights, and were not instruments of commerce in any sense. It was ruled in the prevailing opinion, however, that lottery tickets are subjects of traffic, and are therefore subjects of commerce.
§ 10 (9). What are the subjects of commerce.-Commerce between the states includes only the subjects, which are properly and lawfully articles of commerce. The regulating power
1 Paul v. Virginia, 8 Wall. 168 (1869), 19 L. Ed. 357.
2 Hooper v. California, 155 U. S. 647 (1895), 39 L. Ed. 297.
New York Life Ins. Co. v.
Cravens, 178 U. S. 389 (1890), 44
4 As to the exercise of their power by the states and its effect upon the business of insurance, Bee infra, 16.
of congress does not deprive the states of their inherent police power in protecting the lives and property of their citizens, although the line is oftentimes difficult to draw, as the dissents in the supreme court show, between reasonable police regulation which only indirectly or incidentally affects interstate commerce, and legislation which invades the prerogatives of congress.
Thus the states may legislate to prevent the spread of crime, and may exclude from their limits paupers, convicts, persons likely to become a public charge, and persons afflicted with contagious diseases.1 A state may protect the moral as well as the physical health of its people. A corpse is not the subject of commerce. This power of the state includes the right to protect the people against fraud and deception in the sale of food products. The principle was applied by the court in sustaining a Massachusetts statute, which prohibited the manufacture and sale of imitation butter, oleomargarine, artificially colored so as to cause it to look like butter.
This principle does not extend to the exclusion of any commodity which is generally recognized as a legitimate article of commerce, though condemned and sought to be excluded by the legislation of a particular state. A state cannot determine for itself upon its own standards of public opinion what are and what are not lawful subjects of commerce, against the generally accepted opinion of the commercial world. This distinction was illustrated in another oleomargarine case where
1 But as to right of excluding foreign immigrants, see Henderson v. New York, 92 U. S. 259 (1875), 23 L. Ed. 543; Chy Lung v. Freeman, 92 U. S. 275 (1875), 23 L. Ed. 550.
2 In re Wong Yung Quy, 6 Saw. 442.
8 Plumley v. Massachusetts, 155 U. S. 461 (1895), 39 L. Ed. 223. The same principle was applied in Crossman v. Lurman, 192 U. S. 189 (1904), 48 L. Ed. 401, in sustaining a New York statute as to the importation of artifically colored
foreign coffee. Held that there was no error in excluding evidence that it was a recognized article of commerce. See also Capitol City Dairy Co. v. Ohio, 183 U. S. 238 (1902), 46 L. Ed. 171.
4 Schollenberger V. Pennsylvania, 171 U. S. 1 (1898), 43 L. Ed. 49. In Collins v. New Hampshire, 171 U. S. 31 (1898), 43 L. Ed. 60, the court held invalid, as being in necessary effect prohibitory, a statute prohibiting sale of oleomargarine as a substitute for butter unless colored pink.
the court held invalid a statute of Pennsylvania which absolutely prohibited the manufacture or sale of oleomargarine, so far as that statute prohibited the introduction of oleomargarine from another state and its sale in the original package.
The court distinguished the Plumley (Massachusetts) case on the ground that it was based upon the right of the state to prevent deception and fraud, and that the right of a state in relation to the administration of its internal affairs was one thing, and its right to prevent the introduction within its limits. of an article of commerce was another and totally different thing. The court in its opinion referred to the fact that oleomargarine had been treated by congress as a proper subject of taxation, that this was in effect an affirmative declaration by congress that it was a proper subject of commerce, and that it was established by competent testimony that it was a wholesome human food and a legitimate subject of commerce.
This conflict between local and general public opinion as to what are proper subjects of commerce was illustrated in the case of spirituous liquors which the court held were legitimate subjects of commerce, the introduction and sale whereof in the original package could not be prohibited by the state.3 The right of the state in its control of its domestic commerce to enforce its own views of public policy in prohibiting the manufacture and sale of both liquors and oleomargarine had been sustained by the court.
Tobacco is also a legitimate article of commerce and the supreme court said that it could not take judicial notice of the fact that it was more noxious in the form of cigarettes than in
1 Act of August 2, 1866, c. 40, 24 statutes at large, 209.
2 See infra, § 19.
8 As to the regulation of interstate liquor traffic under Wilson Act, see infra, § 18.
4 Mugler v. Kansa 123 U. S. 623, 31 L. Ed. 205 (1877); Boston Beer Co. v. Mass., 97 U. S. 25; 24 L. Ed. 989 (1878).
5 Powell v. Pennsylvania, 127 U. S. 678 (1888), 32 L. Ed. 253. See also Arbuckle v. Blackburn, 6th
Circuit, 51 C. C. A. 122, 113 Fed. Rep. 616, 65 L. R. A. 864, where the court refused to enjoin the enforcement of a state statute prohibiting coloring, coating or polishing an article intended for food, whereby damage or inferiority is concealed. The court said this was not in conflict with the power of congress to regulate commerce, though applied to articles sold in original packages imported from other states.